Garmin Ltd. (NASDAQ:GRMN) shares yield around 4.9% and the company has no debt on the balance sheet. So more aggressive income investors might want to bet on a turnaround here. However, that’s an iffy bet based on the impact cell phones are having on the GPS market.
Using the GPS
Trimble Navigation Limited (NASDAQ:TRMB) takes a different approach to GPS, integrating it into its products in ways that customers desire. For example, Trimble Navigation Limited (NASDAQ:TRMB) sells a system that automatically steers farm vehicles to optimize performance. Try to get a smartphone to do that!
Using GPS to improve a customer’s efficiency, safety, and accuracy is a clear winner. Trimble Navigation Limited (NASDAQ:TRMB)’s core markets include agriculture, construction, engineering, and defense, among others. The company’s sales have grown from around $500 million in 2003 to over $2 billion last year. Earnings, meanwhile, have almost tripled since dipping during the 2007 to 2009 recession, coming in at about $0.75 a share last year.
That said, the company’s recent PE of around 39 is in line with its five year average, but well above Garmin Ltd. (NASDAQ:GRMN)’s PE of 13. While not cheap, the long-term prospects for Trimble Navigation Limited (NASDAQ:TRMB) are “smartphone resistant” and recent earnings growth has been impressive. Aggressive growth investors might want to take a look.
GM and Garmin Ltd. (NASDAQ:GRMN) are both fighting against free GPS offerings that come along with a product that most people already have and use. That’s an uphill battle, at best. GM’s business won’t be driven by GPS sales, but it’s an issue worth watching since OnStar is an important brand for the company.
Garmin is the GPS leader and is struggling to figure out its place in a changed world, only aggressive income investors should consider it. Lesser known Trimble Navigation Limited (NASDAQ:TRMB), however, uses GPS in ways that should continue to drive its top-line for years to come. While the shares are expensive, the company won’t succumb to the smartphone any time soon.
The article Cell Phones a Problem for GPS Makers, But Not This One originally appeared on Fool.com and is written by Reuben Brewer.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends General Motors. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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